Part 6 - Portfolio Optimisation - Traffic Domains

Part 6 - Portfolio Optimisation - Traffic Domains

If you remember from previous articles the normalised RPM allows us to precisely compare one monetisation provider versus another.

This metric is VERY different from the traditional RPM that is often used more as a marketing tool than an actual unit of measurement. The normalised RPM is the revenue from every monetisation source divided by the raw unfiltered traffic, times by one thousand.

nRPM = Revenue / (Raw Traffic) x 1000

Escrow.com

The chart below is one that shared at Domaining Europe and highlights a number of opportunities for domain investors. The first is on average, direct advertisers pay considerably more for traffic compared to Google based sources.

Normalised RPM chart

This should be no surprise but one of the problems that many domain owners have is they don't have the scale to access these larger payouts. In addition, the majority of monetisation sources are obligated to send the traffic to a potentially sub-optimal solution (eg. Google) so the traffic never gets exposed to the direct advertising networks.

What the chart also displays is each of the parking providers in the sample have massive swings in their average payout levels each day. This is contrary to what many people would expect.

The second chart shows what percentage of the traffic each company is winning over time for the portfolio being measured. The first thing you will notice is that although direct advertising networks pay more, they only pay more for a small amount of the traffic. The reason for this is they don’t have the breadth of advertisers that Google has…..but this is beginning to change.

Percentage of Traffic Won

What can be seen is no company wins more than 35% of the traffic on any particular day. This means the best case scenario that you have with leaving all of your domains with one company is 65% of the time the traffic could perform better elsewhere. Remember, that’s the BEST case scenario. The reality is typically much worse.

Both these two charts also show that every company wins some traffic. So moving all of your domains away from every company is a bad idea. The best thing to do is to drive the right traffic to the right company at the right time. For whatever reason, each of the parking companies being tested performed really well on a subset of domains….the challenge is the subset is often a moving target.

The third chart shows how a typical domain’s traffic could be routed across an eighteen-day period of time. Each row in the chart represents three days. What it shows is how the traffic is routed based upon the normalised RPM being generated for three parking companies. This is a sample of one domain and it should not be construed that one company is better for ALL domains. As can be seen, at the domain level the swings in who is winning is quite dramatic.

Traffic Routing For a Domain

The case for routing your traffic with a technically proficient company is incontrovertible. Building systems, yourself is an enormous undertaking and I would highly recommend against pursing the investment in time and money so that you can focus on other endeavours.

The fact is if you wish to extract the maximum amount of return from your traffic then you need to pursue a course of action that leads to intelligently routing your traffic across multiple monetisation solutions. If you don't do this then you're leaving money on the table.

In the next article I will begin unpacking how to run a properly constructed traffic test as part of your overall portfolio optimisation strategy.

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How to do a Domain Traffic Test – Paying Attention to the Right Number

How to do a Domain Traffic Test – Paying Attention to the Right Number

In the previous articles in this series I discussed the importance of baseline data and what you should be measuring. I’m now about to dive into the most important metric that you can ever use to evaluate the success of a traffic test, the normalised revenue per thousand visitors.

I want to apologise to all those readers where mathematics isn’t your strength….that’s OK. I will try and make this article as simple as possible so that it gets across the point.

Escrow.com

Many domain owners have learned to pay attention to the revenue per thousand visitors (RPM) that is produced by the various parking companies. The reason for this is that it takes into consideration the variation in the traffic levels for each domain. So really what is RPM? The formula for RPM is the following:

Revenue / visitors x 1000

This makes sense until you get under the both revenue and visitors. For a start, visitors is actually filtered traffic and since each parking company filters traffic differently than this number changes for each company. Another way of viewing visitors is:

Raw Traffic x Parking Company Filter

Then there is the Revenue number. What revenue number should you be using? The estimated numbers, the number confirmed 2 days later, the number less clawbacks, the number less account adjustments etc. There are about 7 different revenue numbers that need to be examined for each domain!

For example, over the years we found that some monetisation companies would say that they will pay more for domain traffic during the month and then do an account adjustment at the end of the month. This meant that they were effectively bribing the traffic routing algorithms to during the month and then taking all the money back at the end. To understand who the winner is you need to take this type of behaviour into account.

So let’s look at our formula for RPM now:

(7 Different Revenue Numbers) / (Raw Traffic x Parking Company Filter) x 1000

Because we don’t know what the parking companies use to filter their traffic let’s imagine that we can actually count the Raw Unfiltered Traffic that we send each company for each domain. Let’s also imagine that we are able to sort out the revenue and with a bit of magic work out the actual revenue number for each domain each day. The formula then simplifies and looks like the following:

(Adjusted Revenue)  /  (Raw Traffic)   x  1000

This is the normalised RPM (nlRPM) and it allows you to directly compare any monetisation company against another. What we do is count each bit of traffic that we send each company each day and then measure the adjusted revenue that the traffic generated. When you do this for all companies you get a number for each company so that you can then know which one is actually paying the most.

Let me say from the outset that this starts to get REALLY complicated! This is also what you need to consider if you want to know who is actually winning your traffic at any point in time.

Thankfully, at my company, ParkLogic, have servers and algorithms that all the automatic mass calculation of all of these numbers. We then use these numbers to route the traffic to the winning company. Each day, we have servers that all they do is process data for about 15 hours to get to the nlRPM.

Namejet.com

So let’s imagine that we have a domain that has a huge nlRPM and it’s smashing the baseline data out of the ballpark. Do we claim victory? Heck no! Even when you have the normalised data you need to understand WHY the domain is winning.

For example, let’s imagine that you have an education related domain and you are comparing the baseline data in July versus September. I can almost guarantee that the nlRPM will be higher in September as school’s back and this will attract the educational advertisers!

To put everything into context, the nlRPM is like the science of domaining….you have to have this number really know how you are doing. Understanding why the nlRPM is changing is the art….this is where experience comes into play.

I think that the gold rush provides a really good analogy for traffic monetisation. In the past, there used to be gold lying on the ground everywhere and you didn’t have to do anything to pick it up. Today you have to drive a shaft 3 miles deep and run side passages that follow the seam of gold. This is what I’m talking about with the nlRPM. The gold is still in the mine but you just need to dig it out and this is what I do day in day out.

Please leave a comment or send me a message if you would like me to run a webinar on how to run a properly constructed traffic test.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face.

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